Selected information from Bigg Company's financial statements follows: Fiscal Year Ended December 31 2019 2018 (in thousands) 2017 Gross sales $2,004,719 $1,937,021 $1,835,987 Less: Sales discounts (4,811) (4,649) (4,406) Less: Sales returns and allowances (2,406) (2,324) (2,203) Net sales 1,997,502 1,930,048 1,829,378 Cost of goods sold 621,463 619,847 660,955 Gross profit 1,376,039 1,310,201 1,168,423 Operating expenses 577,369 595,226 583,555 Operating income 798,670 714,975 584,868 Other income (expenses) 15,973 (5,720) (8,773) Net income $814,643 $709,255 $576,095 At December 31 2019 2018 (in thousands) 2017 Accounts receivable $201,290 $195,427 $182,642 Less: Allowance for doubtful accounts (2,516) (2,736) (2,192) Net accounts receivable $198,774 $192,691 $180,450 Required: 1. Calculate the following ratios for 2018 and 2019. Round your answers to two decimal places. 2018 2019 a. Gross profit margin % % b. Operating margin % % c. Net profit margin % % d. Accounts receivable turnover 2. Are operations improving or worsening?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Selected information from Bigg Company's financial statements follows:

	Fiscal Year Ended December 31
	2019	2018 (in thousands)	2017
Gross sales	$2,004,719			$1,937,021	$1,835,987
Less: Sales discounts	(4,811)			(4,649)	(4,406)
Less: Sales returns and allowances	(2,406)			(2,324)	(2,203)
Net sales	1,997,502			1,930,048	1,829,378
Cost of goods sold	621,463			619,847	660,955
Gross profit	1,376,039			1,310,201	1,168,423
Operating expenses	577,369			595,226	583,555
Operating income	798,670			714,975	584,868
Other income (expenses)	15,973			(5,720)	(8,773)
Net income	$814,643			$709,255	$576,095

	At December 31
	2019	2018 (in thousands)	2017
Accounts receivable	$201,290			$195,427	$182,642
Less: Allowance for doubtful accounts	(2,516)			(2,736)	(2,192)
Net accounts receivable	$198,774			$192,691	$180,450

Required:

1. Calculate the following ratios for 2018 and 2019. Round your answers to two decimal places.

		2018		2019
a.	Gross profit margin		%	%
b.	Operating margin		%	%
c.	Net profit margin		%	%
d.	Accounts receivable turnover

2. Are operations improving or worsening?

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